The Underlying Haitian Tragedy

Of course we know how to solve poverty.  Just financially empower every smuck willing to lift a hammer or man a hoe and get out of the way.  Have them organize their communities to allow common assets to be produced.

We do not have time to wait for the benevolent few to accumulate enough liquidity to do it if they ever will or even could.

You must help create a proper legal code and establish title to assets that is simple and cheap.  Get used to treating slabs of reinforced concrete like it is land.

It helps if the community has a prime employer, but that has been solved just about everywhere with government employment of some sort.  At least it distributes cash into the economy.

The advent of cell phones and cell phone banking is just now making all this way easier.

In the event, this horrific event opens the door for a full press reorganization of Haitian society.  They themselves have already shed their history of oppressed ignorance and a full international commitment in resources and manpower can turn this into a healthy country. Perhaps we have the will now.

 

 

The Underlying Tragedy

By DAVID BROOKS

Published: January 14, 2010

http://www.nytimes.com/2010/01/15/opinion/15brooks.html?ref=opinion

On Oct. 17, 1989, a major earthquake with a magnitude of 7.0 struck the Bay Area in Northern California. Sixty-three people were killed. This week, a major earthquake, also measuring a magnitude of 7.0, struck near Port-au-Prince, Haiti. The Red Cross estimates that between 45,000 and 50,000 people have died.

This is not a natural disaster story. This is a poverty story. It’s a story about poorly constructed buildings, bad infrastructure and terrible public services. On Thursday, President Obama told the people of Haiti: “You will not be forsaken; you will not be forgotten.” If he is going to remain faithful to that vow then he is going to have to use this tragedy as an occasion to rethink our approach to global poverty. He’s going to have to acknowledge a few difficult truths.

The first of those truths is that we don’t know how to use aid to reduce poverty. Over the past few decades, the world has spent trillions of dollars to generate growth in the developing world. The countries that have not received much aid, like China, have seen tremendous growth and tremendous poverty reductions. The countries that have received aid, like Haiti, have not.

In the recent anthology “What Works in Development?,” a group of economists try to sort out what we’ve learned. The picture is grim. There are no policy levers that consistently correlate to increased growth. There is nearly zero correlation between how a developing economy does one decade and how it does the next. There is no consistently proven way to reduce corruption. Even improving governing institutions doesn’t seem to produce the expected results.

The chastened tone of these essays is captured by the economist Abhijit Banerjee: “It is not clear to us that the best way to get growth is to do growth policy of any form. Perhaps making growth happen is ultimately beyond our control.”

The second hard truth is that micro-aid is vital but insufficient. Given the failures of macrodevelopment, aid organizations often focus on microprojects. More than 10,000 organizations perform missions of this sort in Haiti. By some estimates, Haiti has more nongovernmental organizations per capita than any other place on earth. They are doing the Lord’s work, especially these days, but even a blizzard of these efforts does not seem to add up to comprehensive change.

Third, it is time to put the thorny issue of culture at the center of efforts to tackle global poverty. Why is Haiti so poor? Well, it has a history of oppression, slavery and colonialism. But so does Barbados, and Barbados is doing pretty well. Haiti has endured ruthless dictators, corruption and foreign invasions. But so has the Dominican Republic, and the D.R. is in much better shape. Haiti and the Dominican Republic share the same island and the same basic environment, yet the border between the two societies offers one of the starkest contrasts on earth — with trees and progress on one side, and deforestation and poverty and early death on the other.

As Lawrence E. Harrison explained in his book “The Central Liberal Truth,” Haiti, like most of the world’s poorest nations, suffers from a complex web of progress-resistant cultural influences. There is the influence of the voodoo religion, which spreads the message that life is capricious and planning futile. There are high levels of social mistrust. Responsibility is often not internalized. Child-rearing practices often involve neglect in the early years and harsh retribution when kids hit 9 or 10.

We’re all supposed to politely respect each other’s cultures. But some cultures are more progress-resistant than others, and a horrible tragedy was just exacerbated by one of them.

Fourth, it’s time to promote locally led paternalism. In this country, we first tried to tackle poverty by throwing money at it, just as we did abroad. Then we tried microcommunity efforts, just as we did abroad. But the programs that really work involve intrusive paternalism.

These programs, like the Harlem Children’s Zone and the No Excuses schools, are led by people who figure they don’t understand all the factors that have contributed to poverty, but they don’t care. They are going to replace parts of the local culture with a highly demanding, highly intensive culture of achievement — involving everything from new child-rearing practices to stricter schools to better job performance.

It’s time to take that approach abroad, too. It’s time to find self-confident local leaders who will create No Excuses countercultures in places like Haiti, surrounding people — maybe just in a neighborhood or a school — with middle-class assumptions, an achievement ethos and tough, measurable demands.

The late political scientist Samuel P. Huntington used to acknowledge that cultural change is hard, but cultures do change after major traumas. This earthquake is certainly a trauma. The only question is whether the outside world continues with the same old, same old.

Nelder on Mexico

We all want to see a prosperous middle class Mexico emerging from the country’s long dalliance with third world status. Mexico has never had more friends north of the border.

Yet here we are watching another victim succumbing to the travesty of the failed drug prohibition strategy maintained in the USA. Any form of prohibition merely finances a growing war between authority and a well financed and organized criminal business class.

Ending the war on drugs by converting it into a medical management problem immediately ends the financial support for all of the wars that the USA is engaged in, including those in the Middle East. It even ends the medical problem substantially and decimates internal gang crime in the USA which exists solely to support the drug distribution business.

It also strips a huge amount of the hot money washing through the offshore banking system on a daily basis and speeds the healing of that system.

It is said that the root of all evil is money and today the global currency system is practically backed by an inflated drug trade that continues to wreck economies and reintroduce barbarism. End it now, Mr. Obama.

My readers should consider this as a heads up on a developing crisis that will impact the USA directly and indirectly. A nasty civil war financed by the drug trade is nobody’s idea of good governance and can possibly draw in US troops acting in support of the Mexican government. It will not be pretty, but it will not be a surprise. This column is alarmist, but should we not be alarmed over how the drug economy has trampled its way through our society for over fifty years?

When the history is written a century from now, no credit will accrue to the US government in its handling of the drug problem. In fact huge blame will be attached for the damage induced.

Once again the same method is used repeatedly with the same continuing bad result. We expect the result to ever be different.

Mexico's Troubles Are Our Troubles
By Chris Nelder Wednesday, March 11th, 2009

http://us.mg4.mail.yahoo.com/dc/launch?.rand=6ck0q9fc831ev

A new contender now tops my long list of worries: Mexico.

I have been keenly aware of Mexico's troubles for most of my life. I lived in Mexico City for a short while as a kid, and saw its crushing poverty firsthand. I vividly remember certain formative experiences, like seeing kids my age dressed in rags and panhandling for centavos, or eight full-grown men riding a single motorcycle, or a rural cave dwelling with a TV antenna sticking out of the top, powered by an illegal tap on a nearby power line. I also grew up in Tucson, where shopping excursions to the border town of Nogales 60 miles away was standard fare when we had visitors.

But I have written about Mexico's oil production repeatedly in this column primarily because it is so essential to US supply. Mexico is our #3 source of imports, providing 1.3 million barrels per day (mbpd), or about 6% of our total petroleum supply (EIA, Dec 2008 data).

Yet Mexico's days as a top oil producer, and possibly its days as a democratic nation, are numbered.

Mexico's largest oil field, Cantarell, is one of the four largest "supergiant" oil fields in the world, and was once the world's second-largest producer (after Saudi Arabia's Ghawar field). It peaked in 2003 at 2.1 mbpd, but thanks to a program of nitrogen injection that was pursued to maximize the rate of production (probably at the expense of long-term production), its production is crashing at an accelerating rate, currently about 38% per year. It is now producing about 0.77 mbpd, and will probably fall to 0.5 mbpd before tailing off at a gentler rate (or so Pemex hopes).

Mexico's largest producing region is now the Ku-Maloob-Zaap (KMZ) complex, adjacent to the Cantarell complex. It's a much smaller complex than Cantarell, and at 0.78 mbpd it is near its planned maximum production rate. Nitrogen injection was initiated from the beginning, which we could take as an indication that Mexico would rather maximize its revenue now than worry about tomorrow.

One doesn't have to look too far to see why that might be.

Oil is Mexico's number-one export. With its oil revenues in decline, the state is finding it increasingly difficult to fund operations-including operations against one of its other top exports: illegal drugs.

"A State of Undeclared War"

Drug cartels have grown in power and wealth in Mexico, and have now taken to open war with the authorities, who are finding themselves increasingly outgunned against better funded and supplied adversaries sporting military-grade weaponry.

An estimated 10,000 people have died in the violence since Mexico's president Felipe Calderón took office in 2006 and began a campaign against organized crime. Over 6,000 died last year alone, of which about four-fifths were criminals killing criminals, plus about 800 police, soldiers, prosecutors and other officials who dared to fight organized crime. Another 1000 have already died in 2009.

The atrocities committed are brazen and horrific, including torture, beheadings, and public displays of mutilated corpses. Gangs hang banners in the streets announcing their views, make public threats against officials, and make YouTube videos of their executions. Extortion and protection rackets are proliferating as the federal crackdown has splintered the cartels into warring factions. The nation's framework of 32 independent states, a decrepit judicial process, and an ineffective and disorganized federal police force have left the nation with a corrupt law enforcement system that is ill-equipped to control the cartels.

The violence is primarily concentrated in the Sinaloa region, and along the border with the US, as gangs fight with one another for market share and try to smuggle their goods north, and guns and cash south. Consequently, the border cities of the US are fighting an escalating battle of their own.

Phoenix is now the kidnapping capitol of the US, with 366 abductions last year, mostly conducted by and against cartel members for financial gain and displays of power, but increasingly also against innocent civilians and even against anti-kidnapping authorities. Phoenix is now also the top gateway city where illegal drugs enter the US. Other US cities along Mexican borders of California, Arizona and Texas are contending with increased violence and trade in weapons.

The reach of the cartels now extends to every corner of the US, from distribution of marijuana and cocaine in major cities, to guerilla pot farms in national parks and the mountains of Northern California. Mexican drug cartels are now the major criminal force in America, surpassing the Mafia.

In a congressional hearing with the Department of Homeland Security yesterday, Rep. John Culberson of Texas called the conflict "a state of undeclared war on the southern border."

Strangely, Mexico's troubles have remained mostly off the radar in the US, until the State Department issued a warning on February 20 urging American travelers—particularly students on spring break—to avoid going there for their own safety.

So what does the estimated $20 billion trade in illegal drugs from Mexico have to do with energy, you ask?

Oil Exports Are Crucial

Mexico's exports of oil and gas to the US account for over one-third of the government's revenues, and their decline is expected to widen the country's current-account deficit to an average 3.6% of GDP in 2009-13. Its economy is projected to contract by 2% this year as its exports to the US fall due to the recession, which has weakened the peso badly; around a third of its value relative to the dollar has eroded since last August.

The declining production of Cantarell alone will deprive Mexico's economy of roughly $5 billion, or half a percent of its approximately $1 trillion GDP.

At the same time, a large number of migrant workers in the US are going back home as their work here dries up. (On a trip to Oregon a few weeks ago, I visited a commercial farmer who put a sign up at the end of his driveway saying "No Trabajo" after being hounded by up to five worker gangs per day looking for field work.) The loss of that income to the workers' families back home will be keenly felt.

Add to that declining tourism revenues—my family doesn't take shopping trips to Mexico anymore, due to poor security and other problems—and a loss of income due to the falling price of oil, and you have an economy that is truly on the ropes.

It will be very difficult for the Mexican government to maintain order, keep its people fed and sheltered, and fight the drug cartels under such severe pressures. Some experienced analysts of Mexico have even speculated that the country will not survive as a nation-state for more than another few years.

It will also make it very difficult for Pemex, under whose sole domain the Mexican petroleum industry operates, to raise the necessary capital to expand its oil and gas production. Mexican law prohibits foreign companies from owning its petroleum resources, so it relies heavily on debt backed by foreign issuers to fund its operations.

Given the increasing uncertainty of Mexico's future, the inability of its law enforcement to maintain security, the crippling of its currency, declining tourism, and a possible downgrading of its investment grade on the horizon, I find it hard to imagine how Pemex will continue to invest at the necessary levels—$20 billion in capital expenditures are planned for this year—to keep its oil and gas flowing to US markets.

On current trends, Mexico's oil and gas exports to the US will cease entirely within seven years.

How will the US adjust to a 6% loss in its oil supply from Mexico alone, when all of its other major suppliers are also in decline, and foreign competitors are able and willing to pay hefty sums for the last, marginal barrel of exported oil?

It won't be easy, but our remaining reserves right here at home will become an increasingly important answer to that challenge, and those barrels will sell for much higher prices than they do today. Not only is Mexico my number-one worry, it's also my number-one reason to invest in domestic oil and gas producers with significant reserves.

Much of our unconventional oil reserves are too expensive to produce at a profit while oil is still in the $40s. But that might turn out to be a good thing. If we were to leave them in the ground for another three years, they could be worth three times as much when we do produce them, and make a crucial contribution to our national security.

Until next time,

Chris